Customer Reviews

Innovation and Entrepreneurship: Practice and Principles

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Innovation and Entrepreneurship is a good resource for categorizing and identifying sources of innovation. Drucker does an excellent job of organizing the key elements involved in innovation and there is a fair amount of real world examples that help the reader understand the concepts. However, most books on this topic usually leave me asking for more concrete examples of the execution of the topics laid out here, and this book is no exception. Innovation and Entrepreneurship is more about creating a framework for innovation that can be used to compartmentalize current practices and shed light on their origins. Drucker accurately points out that the least likely sources of innovation are from new knowledge and bright ideas. The insight into this alone, makes the book well worth reading. If you are looking for a way to categorize and identify the most effective sources of innovation in an effort to budget the research efforts in you corporation, I highly recommend this book. If you are an entrepreneur looking for new sources, you might me better off looking elsewhere, such as Clayton Christensen's The Innovator's Dilemma.

I am very gratified to note that this wonderful book is still around & is being re-released as a new print. I read it when it was first published in the mid-80s. I remember that I had reread it during the early 90's when I had just started my own consultancy business.

I fully concur that this book is the first book to present innovation & entrepreneurship as a purposeful & systematic discipline. The book concists of three major parts:

- Part I: The Practice of Innovation;
- Part II: The Practice of Entrepreneurship;
- Part III: Entrepreneurial Strategies;

According to the author, entrepreneurial strategies are as important as purposeful innovation & entrepreneurial management. Together, they make up innovation & entrepreneurship.

What I like most about the book is the author's clear definition & concise elaboration of innovation as a disciplined business practice. He makes a very clear distinction: "Business, because of its purpose, has just two functions, & only two: MARKETING & INNOVATION. Marketing & Innovation make money. Everything else is a cost."

Best of all, he also provides some general guidelines for identifying innovative opportunities.

As a matter of fact, in Part I of the book, he describes the seven sources for innovative opportunities. Each of these seven sources are systematically covered in a specific chapter. For all entrepreneur-wannabes out there, understanding these 'innovative secrets of success' alone is worth the price of the entire book.

This is my pick for the best business book of the 20th century. I have read this book three times, have taken extensive notes on it, and still learn a great deal with each re-reading. Peter Drucker has written many excellent business books, but this one shines. Unlike other books with "entrepreneurship" and "innovation" in their titles, this book does not go through the mechanics of setting or running up a business, but instead focuses on the essence of good business planning and practice.

With the publication of this book, which goes all the way back to the mid-eighties, Drucker has set the standard for serious entrepreneurship. Drucker tells the reader that innovation and entrepreneurship go hand in hand, and that both innovation and entrepreneurship can be practiced by large and small companies.

Using a plethora of available case studies, Drucker shows how many companies large and small, known and unknown, have successfully implemented entrepreneurial practices. Drucker tells the reader how to go about implementing an entrepreneurial culture, and more importantly, what not to do when trying to develop such an outlook and culture in the organization.

Drucker identifies seven sources of innovation, and explains very clearly how to go about sowing the seeds of and nurturing an innovation. He then lays down the principles of entrepreneurship, and gives the reader some entrepreneurial strategies. Throughout the text, he gives both the pluses and the minuses of his ideas.

This book, first published in 1985, was way ahead of the curve. It literally predicted the profound effects of the IT revolution, coined the concept of lifelong learning, and identified the pivotal role of sound managerial practices in entrepreneurship and the new venture. Those of us who are active participants in the 'New Economy' should sit up and take notice of this book.

These days, it is very fashionable to call oneself an 'entrepreneur', but only Drucker has a clear concept of what an entrepreneur really is. Any person who wants to practice serious entrepreneurship, whether they work for a big company or are involved in a new venture, must read this book.

Drucker's thesis: "Systematic innovation consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation."

The book is divided into three sections: The practice of innovation (where to look to find indicators of opportunity for innovative change); The practice of entrepreneurship (managing so to foster innovation); and Entrepreneurial strategies (competitive strategies).

Drucker provides a detailed analysis of the sources of innovation and strategies for the implementation of innovation-based changes. He shows, with many real-world examples, how systematic innovation can be applied to business, government, politics, non-profit and service organizations.

The analysis is thorough, well structured and easy to understand. He finishes with an interesting discussion of why innovation is so necessary today, and gives some good examples of areas of society operating on dated assumptions and suggests some insightful innovations.

Even though the book was written some years ago, his methodology remains applicable. In terms of contribution to strategy development I rank Innovation and Entrepreneurship up there with Michael Porter's Competitive Strategy.

My only criticism of Drucker is his sometimes awkward writing style and his tendency to wordiness. However, I give the book full marks for being a well-researched and logically presented work.

Peter Drucker has conducted an extraordinary thought experiment and corroborated his hypothesis with retrospective data. I really believe both the logic and the implications of his book. This is because I have been an innovator (scientist and manager) in Fortune 500 companies as well as tiny Startups and no matter what the environment, Druckers definition of the "seven sources of innovative opportunity" are exactly true in reality. Especially the two most prevalent sources: solving a consumer need or desire and the extreme opposite of that, finding an application of a newly available technology. This book spells out the "what" of innovation. It does not talk about the "how" of innovation since that is a different technical subject altogether.

Peter Drucker gave us the thought that "the purpose of a business is to create a customer" a thought that can get lost by entrepreneurs pulled in many directions at once. Innovation is also a subject that few have written about knowledgeably. You will find this book to be a good reference for the principles that will always determine whether or not your focus is proper. And no one needs proper focus more than innovators and entrepreneurs. I also think that you would find it helpful to get an overview of all of Peter Drucker's work by reading Jack Beatty's The World According to Peter Drucker. Also, Peter Drucker's newest book, Management Challenges for the 21st Century, is a good companion piece for Innovation and Entrepreneurship by bringing your attention to the primary trends that will be dominant in the early part of the new century. One of the things that I like about all Peter Drucker books is that they are very well written. This is rare in business books, and a great accomplishment when you realize that Peter Drucker's native tongue is German (he was born in Austria).

Drucker has a remarkable ability to deflate any self-styled entrepreneur and "innovator." His book discusses the sources of innovation, concluding rather significantly that knowledge-based innovation is rarely successful-that innovation generally works best when all the factors are known and put into new combinations that work exceedingly well-and that successful innovations start small, focus on the simplest element that can be understood by any half-wit, don't cost a lot, and are never grandiose.

Drucker always seemed to be years, if not decades, ahead of anyone in his field, and Innovation and Entrepreneurship was the first book to treat the subject in a systematic, non-sensational way. Drucker is clear that his book is not about the psychology or character of entrepreneurs. It is not the mysterious "invention", or `flash of genius' so often ascribed to the wealth creator that interests him, but actions and behaviour - how innovation and entrepreneurship can be boiled down to a system that can be applied by anyone. By 1914, the time World War I broke out, "invention" had become "research," a systematic, purposeful activity, which is planned and organized with high predictability both of the results aimed at and likely to be achieved. Something similar now has to be done with respect to innovation. Entrepreneurs will have to learn to practice systematic innovation.

Successful entrepreneurs do not wait until having a "bright idea"; they go to work. Altogether, they do not look for the "biggie," the innovation that will "revolutionize the industry," create a "billion-dollar business," or "make one rich overnight." Those entrepreneurs who start out with the idea that they'll make it big--and in a hurry--can be guaranteed failure. They are almost bound to do the wrong things. Drucker states that a management team should be already built before the business will grow mid-side; otherwise it would be too late. He gives the examples when the founders of Ford Motor and Honda Motor to not start the venture until they have found a reliable partner who will run administration, finance, distribution, marketing, sales, and personnel.

Drucker somewhat envisioned the I.T. bubble of 2001. Many new ventures, especially high-tech, fail because they ignore the basic principles that were known for centuries. He states that high-tech is not intrinsically risky. It is not riskier than any other business, if properly applied. Entrepreneurship is only risky, he observes, when so-called entrepreneurs `violate elementary and well-known rules.' It is not risky when it is systematic, managed, and purposeful.

Accroding to Drucker, Innovation does not have to be technical, does not indeed have to be a "thing" altogether. Wherever introduced, it changes the economy from supply-driven to demand-driven, regardless almost of the productive level of the economy. "Innovation," then, is an economic or social rather than a technical term. It can be defined as changing the yield of resources.

The book consists of three sections.

In the first section, Drucker describes seven sources of innovative opportunity: The Unexpected, Incongruities, Process Need, Industry and Market Structures, Demographics, Changes in Perception, and New Knowledge. He debunks the believe that innovation is "a bright idea" and maintains that dependable innovative ideas come from systematic exploration of the seven sources of innovative opportunity.

The second section covers entrepreneurship and especially the development of an entrepreneurial culture within an organization. Along with suggestions for things to do, there are a couple of suggestions of things that will probably fail such as buying an entrepreneurial company in order to help a non-entrepreneurial company change.

The third section covers four major entrepreneurial strategies ("fustest with the mostest", "hit them where they ain't", ecological niches, and changing values and characteristics) with a discussion of some derivatives of each strategy and a look at the advantages and pitfalls of each.

I highly recommend the book "The Effective Executive" by Peter Drucker, in addition to this book.

The writing style is fluid and many industry examples are given to illustrate the author's point. There is a lot of meat in this book which provides a framework for the thought process. I don't necessarily agree with all his concepts. He considers entrepreneurship to be an organized process and not a by-product of talent. I personally think it is a combination. You need resources but you also need to know how to use it. In some segments of the book, he offers no explanation for certain successes and treats entrepreneurship as something that happens despite planning to the contrary. There are some minor contradictions. Still, some of his thoughts are timeless, thought provoking and valuable. The purpose therefore is to continue to explore new ideas and try it on for size.